EPA rules offer opportunity for Texas energy providers

Some Texas business groups and politicians are expressing outrage at the Environmental Protection Agency's goal of reducing U.S. emissions of carbon dioxide from electricity generation by 30 percent from 2005 levels by 2030. That's a shame, because the new regulations are a good deal for industry and a great opportunity for Texas.

I come to that conclusion by accepting that carbon dioxide is a dangerous greenhouse gas that is changing our climate.

Scientists have demonstrated clearly that burning hundreds of gigatons of carbon-based fuels over the last 200 years has increased carbon dioxide levels and raised the Earth's average temperature.

The science behind human-induced climate change is the same science that concludes inhaling smoke into your lungs is bad for you, that chlorofluorocarbons damage the ozone layer and unfiltered smokestack emissions cause acid rain.

Industry lobbyists rebutted all of these findings when they were released and swore that solving these problems would destroy our way of life.

Washington and Austin industry lobbyists fired a coordinated salvo of remarkably similar talking points on Monday, calling the rule to reduce carbon dioxide emissions a disaster for the U.S. economy that will kill jobs and lead to blackouts.

The measure's supporters, though, point out that we've seen these histrionics with every environmental regulation proposed since President Richard Nixon gave the EPA regulatory powers in 1970. Since then, though, we've seen a 70 percent reduction in air pollution and the strongest economy on the planet.

American business people always find solutions that deliver value to shareholders while making the world a better place. Reducing greenhouse gas emissions offers the same opportunity, and Texans are uniquely positioned to lead the way.

Head start

The rule, proposed to take effect on June 1, 2015, already represents a compromise between industry and environmentalists. Setting 2005 as the base year gave industry a head start because carbon dioxide emissions peaked in 2007 and already have dropped 10 percent due to the recession and increased natural gas use.

Setting 2030 as the deadline allows industry to recover investments made in existing technology and provide time and flexibility to prepare for the future. The majority of coal plants in Texas will be 40 to 50 years old in 2020 and ready for more efficient boilers or complete replacement with cleaner alternatives.

Full disclosure: My wife works in the renewable power industry.

Translator

To read this article in one of Houston's most-spoken languages, click on the button below.

Chris Tomlinson

But people in the business aren't alone in the belief that alternatives to aging coal plants not only make sense but probably are inevitable.

In April, Citigroup predicted all generation capacity added after 2020 will use renewable sources based solely on price advantage, though plants fired by coal or natural gas still will generate more than half of the nation's electricity.

No single solution

The EPA's proposed rule doesn't dictate a solution. It provides a framework for state regulators and industry to find what works best for each state's circumstances, whether it's boosting efficiency, investing in cleaner technologies or shutting down older coal plants.

This is good for Texas companies that produce power from indigenous resources, like natural gas, wind and solar or want to expand existing nuclear facilities.

Demand could soar

America's Natural Gas Alliance, a gas industry trade group, estimates the rule could boost demand for natural gas by 45 percent without much effect on price because the nation is producing so much right now.

"This rule is really good for natural gas and will not raise prices," agreed Jim Marston, the Environmental Defense Fund's vice president for U.S. climate and energy. "The question for Texas politicians is, will they help Texas natural gas, or will they fight the rule and help West Virginia coal?"

'Energy renaissance'

Companies that produce natural gas also see opportunity.

"While we are still evaluating the proposed rule, it's clear the increased use of natural gas in the existing power sector could create the opportunity for the U.S. to further capitalize on abundant North American natural gas supplies - furthering an energy renaissance that continues to create jobs and a meaningful reduction of greenhouse gas emissions," Marvin Odum, president of Shell Oil Co., said in a statement responding to the EPA proposal.

There is good reason, though, for the electric power sector to feel beat up right now. In addition to the requirement that they pay for the pollution they've historically pumped into the atmosphere for free, Barclay's downgraded utility stocks last week because of the existential threat of thousands of people putting cheap solar panels on their homes and selling power to the grid rather than consuming it.

The sector is being disrupted, and entrenched interests are worried. Texas entrepreneurs should be salivating.

Time, money at stake

Many Texas business and political leaders condemned the new rule before it was released: Any change is dangerous, any rule is unacceptable. They'll engage in long-running taxpayer-financed legal battles they'll likely lose, wasting time and money better used innovating.